India is moving toward fees on large UPI payments. A merchant discount rate of 0.4% will be applied to some person-to-merchant payments above Rs 2,000. Reports say the fee will not hit consumers. Smaller UPI payments stay free of charge.

The change only affects larger payments. It marks a shift from the current no-fee structure. The new rate applies only to qualified transactions over Rs 2,000. Consumers are not charged the fee, based on current reporting. The fee applies to transactions between customers and businesses, not to all UPI transactions.

The government and the central bank have been discussing the move for some time. The idea is to make large digital payments sustainable. Banks and payment firms have repeatedly sought such a charge. The current system has a zero-cost model for most users. A fee on larger merchant payments could reshape the market. The reported rate is lower than some had expected. It remains unclear how quickly the charge will roll out. Consumers using UPI for small purchases should not notice any change.